Good afternoon. My name is Krista and I will be your conference operator today. At this time I would like to welcome everyone to our conference call. All lines have been placed on mute to prevent any background noise and after the speaker's remarks there will be a question-and-answer session. [Operator Instructions] Thank you. And at this time I would like to turn the floor over to Brittany Moore, Director of Investor Relations.

Thank you, Krista. And welcome to CleanSpark’s Fiscal Full-Year Financial Results Call covering the period October 1, 2023 through September 30, 2024. Our press release was issued about 30 minutes ago and is available on our website at CleanSpark.com. Today's call is also being webcast and a replay and transcript will be available on our website. On the call with me are Zach Bradford, our Chief Executive Officer; and Gary Vecchiarelli, our Chief Financial Officer. Keep in mind that some of the statements we make today are forward-looking and based on our best view of the world and our business as we see them today. The statements and information provided remain subject to the risk factors disclosed in our most recently filed annual report. We will also discuss certain non-GAAP financial measures concerning our performance during today's call. You can find the reconciliation of non-GAAP financial measures in our press release, which is available on our website. And with that, it is my pleasure to turn the call over to Zach.

Thank you, Brittany, and good afternoon, everyone. We appreciate your interest in our company as we share the results of a pivotal and transformative year for CleanSpark. The year marked the culmination of several years of strategic planning, preparation, and execution to fully leverage the halving event. We emerged with an optimal combination of power contracts, infrastructure, mining fleet, Bitcoin HODL, and organic growth pipeline as we enter the next phase of the cycle. Our financial performance this year reflects a sustained growth trajectory with more than $378.9 million in revenue generated, that's a substantial increase from the $164.8 million reported last fiscal year. This year-over-year growth of over 125% demonstrates our precise execution of plan before and after the halving that occurred midway through our fiscal year. Our adjusted EBITDA of $245.8 million for the year also showed impressive growth, that's an increase of $220.8 million or 882% growth over last year, underscoring the success of our Infrastructure First expansion strategy and its focus on fleet efficiency and operational excellence. As a result, we produced our strongest year of financial performance to-date, solidifying a track record of effective execution and keeping promises to shareholders. Reflecting on the past year, our growth aligns closely with the clear strategic priorities and objectives that we've articulated since our pivot to Bitcoin mining. CleanSpark has prioritized infrastructure at its core foundation, putting us in the best position to source miners to optimize fleet efficiency and deploy new hash rate into production in the most capital efficient manner. A clear example of this strategy was the Bit Miner order that we placed in January, 2024. That order included 60,000 units and a strategic option to purchase another 100,000 units at the same low fixed price. This cost certainty allowed the team to focus on…

Thank you, Zach, and good afternoon, everyone. It's my pleasure to review the detailed results for the full 2024 fiscal year. Hopefully, you've had a chance to see the earnings release, which has been posted to our website. We anticipate our Form 10-K will be posted before market open tomorrow. As Zach said, it's been a pivotal and transformative year and our financial results reflect this. The central fact of fiscal year 2024 is that Q4 was the first full quarter following the most recent halving event. Warren Buffett has famously said, when the tide goes out, you find out who has been swimming naked. While I differ with him when it comes to the prospect for Bitcoin, Mr. Buffett's quip is a perfect metaphor for the impact of the halving event on the weakest operators in our space. When the tide came in this time, CleanSpark had nothing to be embarrassed about. And in fact, we're downright proud of our performance, one that fully justifies the pivot to Bitcoin mining we made several years ago. Our revenues for the year were $378.9 million, an increase of approximately $210.6 million, or 125%. This increase was primarily driven by the increase in our Bitcoin production, as well as a steady rise in its price. For reference, we produced approximately 7,100 Bitcoins for the fiscal year, compared to approximately 6,900 Bitcoin for fiscal year 2023, which shows we have managed to outpace the significant increase in difficulty in the pre-programmed halving event in April. Our gross profit for the year was $213.5 million, an increase in approximately $138.6 million, or 185% over the prior year. Again, the largest contributor here was the average Bitcoin price, which was significantly higher than last fiscal year. We also saw lower energy prices on a per…

Thank you, Gary, for that detailed financial overview. We will now open the floor to questions from the analyst community. Operator, please provide instructions and manage the queue for the Q&A session.

Thank you. Ladies and gentlemen, at this point we will begin the question-and-answer session. [Operator Instructions] Your first question comes from Mike Colonnese with HC Wainwright. Please go ahead.

Hi, good afternoon, guys, and congrats on a very strong fiscal year here. Just a couple from me. First, it would be great to get your perspective as to why you believe that miners have lagged Bitcoin this year, especially considering that, at least historically speaking, CleanSpark and some of the other top tier miners in the space have actually outperformed Bitcoin during this stage of the cycle. Would be great to get your views there.

Hey, Mike, Thanks for joining the call. I think the key with this is you have to zoom out a little bit. If you zoom out a little bit over this, call it, a two-year period, the miners, CleanSpark included, have meaningfully continued to outperform Bitcoin. I look at this as Bitcoin's catching its breath and catching up. But I think it's positioned us incredibly well for what is ultimately going to be a slingshot in value as the market begins to better understand what the miners can do and how the yields continue to be generated. So hopefully I see this as just a plateau point right before we see another upswing.

That's great to get your perspective, Zach. And I'm curious if you could provide some more insight in terms of how you're thinking about the current market environment for ASICs. I know you're looking at 50 exahash by the end of next year. But how should we expect CleanSpark’s to approach the ASIC market? How are you thinking about pricing and future repurchases here?

Yes, the key for us is we've already locked in price certainty. I mentioned during the call the S21 Pro purchase, which was 160,000 miners, but we also have the XP purchase, which is a meaningful option for us. So in addition to the miners we've committed to that essentially get us just about to 50, we have the ability to take down even more. So there's another 50,000 units with price certainty on them. So we don't have to worry as much about that swing in whatever the market does. Again, certainty is what we created. We actually have price certainty through 63 exahash on the ASIC market. With that said, regardless of where the ASICs are at on the go forward and in the future. Beyond that, we've proven we have a great track record of having a best-in-class purchasing. So wherever the market lands, we will make the right capital decision on timing of investment, when to add more to those options, when to take down the option and how we deploy that. So again, I think we've handled it really well as a track record base. We have enough optionality ahead of us over the next, I'll call it, six months. But definitely, our relationships are strong. So I expect regardless, we'll get best-in-class pricing.

Thank you for taking my questions.

Your next question comes from the line of Brian Dobson with Clear Street. Please go ahead.

Good evening. I want to talk about this digital asset management initiative that you highlighted, I suppose, what are some of the paths you can take to generate yield on your HODL? And what level of yield do you think might be possible?

Hey, thanks for the question, Brian. Look, we're quite excited about pursuing this Digital Asset Management strategy as well. But I'll say that we're going to pursue a strategy of crawl, walk, run. And really, that's going to be rooted in a -- first focus in making sure that we preserve the capital, right? Because when you have the Bitcoin HODL balance that we have, we want to make sure that we really protect that. When it comes to finding those opportunities to generate the yield, we're looking at various strategies right now. We just closed the Grid transaction here. end of October, so the team is just getting up to speed and really looking at who those partners are. But ultimately, it could take various forms of providing covered calls, who is lending to bitcoin. There's even some talk about providing liquidity to ETFs in the marketplace. So, but you'll expect to hear more information from us as fiscal year '25 goes on, and we'll really be focused on getting a healthy return on those assets as the year goes on.

Great to hear. That's very exciting stuff. And then, I guess, just stepping back, maybe if you can look at the big picture for the industry. What trends do you expect to drive mining in 2025? And how has the recent presidential election impacted your outlook for doing business in the United States?

Yes. So from a trend point of view, I think that we have a lot of tailwinds right now. And that has -- at your second point on the political side, I think we're going to see a lot of opportunities in the capital markets further open as we see a change really on the SEC side. It's been a tough couple of years for anybody involved in this sector, based on how regime was previously run. So I think capital is going to open up even more than it already has in ways that will be very positive. In addition to that, I think we're going to end up with regulatory certainty, but just generally a friendlier regulatory environment. So we're incredibly excited about how things go. Now from an industry trend point of view, I'm going to go back to something that I've kind of beating the drum on, and that is scale matters. And so the bigger miners like ourselves are going to continue to get the best access and the best pricing to capital, which is going to create the best access and pricing for opportunities. I do think that acquisitions are going to look differently. Private miners are still in the same situation, just because capital opened up to the public doesn't mean it's necessarily going to open up to the private miner. So there's still going to be opportunities there. But how we view them is going to really come down to valuation. Where we've seen people that are very reasonable, they come in at the same valuations. We've also seen private miners that want substantially higher valuation. This comes down to my comment where I said we're going to avoid making the wrong decision, but we do think miners that have fallen behind maybe put in a position where they may choose capital destructive activities as we view them. So there may be some headlines on opportunities that we passed on. And we pass on because it doesn't create the ROI that we want to have. Just because Bitcoin's up, we still have to measure timing to ROI for any investments we make, and that's incredibly important to us. So again, a ton of opportunity in the future, but we're going to approach it with a very measured approach. The great thing is we have several hundred megawatts of opportunities for organic growth, and we've proven that we have a track record of being able to build sites. And so we're going to focus probably in '25 more on building than on buying.

Yes, excellent. Thanks for that color. And I suppose just as a final question. Have your thoughts on HPC opportunities changed at all since your last call?

No. We still think that a very focused approach in what we have. As Gary mentioned, we had a great cost of production of Bitcoin and with Bitcoin going up that even further enhances what was very healthy margins. And so when you look at margins that we can produce potentially tomorrow, right, on any opportunity we look at, the path to high-margin revenue is quickest for Bitcoin mining as compared to HPC, and it's not even close. So until such a time as that changes, we are going to stay very focused on what we're doing and what we do best, which is Bitcoin mining.

Excellent. Great to hear. Thanks very much.

Your next question comes from the line of Tyler DiMatteo with BTIG. Please go ahead.

Hi guys and thanks for taking the question. Zach, I wanted to follow-up on your comments there in terms of the buy versus build decision and how you are kind of prioritizing maybe the build decision in 2025. I guess, where do you kind of see the opportunity in terms of the current footprint. I know you had Wyoming, which is some incremental couple of hundred megawatts. I guess just how do you kind of think about the footprint here more broadly? And what's the most readily available as you look out to next year, broadly speaking?

Yes. I'm going to speak broadly about -- we see the U.S. still as a very ripe opportunity. And it's because we understand power markets here. But we think that based on the changes in the administration that the power markets will just continue to get better. The U.S. is full of abundant low-cost power, if you know where to find it. And we focus heavily on rural areas that are being overlooked as an opportunity. So that's where we see the opportunity being the best in the U.S. It's in rural USA. And as we go to these towns, we find that I look at it this way. If we're going to build something, the best opportunity is to build hardened immersion-cooled infrastructure, and if we're going to go buy something, there's a lot of air cooled infrastructure readily available. So that's really going to be how we look at this. First rural America; second, the majority of our builds are going to be immersion-based -- and if to the extent we do, do M&A, which I'm sure there's still be some, it will probably be air cool. But it's going to be in areas where the advantages to air cools are going to be that we can turn it on immediately. It's that turnkey walk in, generate revenue. And again, we've built our immersion and air cooled systems in a way that we can now build for essentially the same cost. And so that's how we're viewing how we're going to build and how we're going to buy and where we're going to do it.

Got it. Okay. Thankful. And then my follow-up here, I just wanted to talk a little bit about fleet efficiently. You guys have done a nice job over the last year, improving that. I guess how do you kind of think about that going through the next 12-months here? And more broadly, as an industry in terms of newer generation of rigs, how do you kind of think about the step function fleet efficiency and kind of where that improvement can really end up over time as we're sitting in this high-teens joules per terahash, but potentially other rigs coming down into the low-double-digits.

We're adding latest generation, so we're adding the latest generation rigs that are in the 13s already. But what we're not doing is we're not retiring things without need. So yes, we still have some XPs online because they are generating meaningful capital and it's not capital that we're going to throw out maybe with the bath water, just to chase a number. That's one of the key things that we want to drive home is it takes balance when you're talking about capital allocation. So we're not going to chase the lowest number at the cost of spending capital for ways that's essentially unnecessary. And so we do expect to move from 19 to 18 to 17 and so forth all the way down. It's going to be an incremental path that's going to be very measured about return to capital to our shareholders. Now where do I think that we're going to go from a Moore's Law point of view. I think we're going to continue to approach that 10 or 9 level. And then I do think that's where technology changes are going to be required. The chips are going to be able to do it. But what about the heat extraction? This is part of the reason we're going to build more immersion into the future. I think that air cooled heat extraction will get more difficult over the next four years. And so it will be more valuable to invest in immersion. Do think that we'll get into the single digits and continue to go? Moore's Laws says absolutely, we're going to do that. But it's about having the infrastructure ready and available to accept the newest technologies, as we progress because this is not a measurement of where we're at today or where we're at tomorrow. This is a measurement about how are we going to use capital efficiently to have the right mix of efficiency and power price generate yield not now, but also with the 2028 halving. So we're going to look at this really over the entire cycle, but we do think that Immersion is going to be a key role in kind of keeping up with that efficiency.

Thanks for the call there, Zach. I'll turn it back to the queue.

Our next question comes from the line of Brett Knoblauch with Cantor Fitzgerald. Please go ahead.

Hi guys, congrats on the quarter and thanks for taking my question. Maybe just touching on CapEx for a minute. I know you guys have kind of prefixed prices on the miner side. But on the infrastructure side, the build-out in Wyoming and likely other locations. I guess, what should we be expecting for next year? And in terms of liquidity, would you tap into the Bitcoin position? Or would you rely just more on the equity markets for funding the both remaining build-out and mining purchases?

So we think that the markets are going to be a lot more open to diverse options. So I'm not going to commit to any one type of capital at this point in time. We think that there's plenty of room to expand our ability to leverage our Bitcoin further. But there's also other -- there's the equity market, there's non-dilutive access to capital that we can do. There's just opportunity. That's the great thing about being a Bitcoin miner right now is capital markets are open for business. And so how we do that is going to be whatever is going to generate the best return to our shareholders. from an infrastructure side, kind of to your point -- between here and 63 is about roughly a $200 million investment, and then the miners are on top of which we've secured at very advantageous prices. So there's not a huge barrier between here and getting to beyond 50.

Perfect. And then maybe just on the M&A landscape. I guess post having FOB, there will be a lot more deals than we saw, and I know you guys have been aggressive. Do you think the reason for maybe not seeing more deals in this space, is that a lot of maybe the subscale miners were looking into alternative use cases for their facilities like AI, HPC and maybe they're evaluating that before they kind of consider selling or we see another wave of consolidating?

I think it just depends on where you were at. We've obviously took advantage of a lot of private opportunities that existed. I think that there's still a lot of people that believe in Bitcoin on -- want to continue to mine privately. And so I think that, that's where we're going to see some additional opportunities come as the private miners wanted to see the other side of the halving. You remember, Bitcoin has proven itself to be very cyclical. And there was generally in past cycles, it took 180 days plus for Bitcoin price to really adjust. We saw that happen this time around. So there's also the reality where some private miners, they basically just held off. They didn't run anything and they waited for the 180 days to go by it or turn back on. I think that we're going to see some of them, I'll call it, exhaust themselves as the whatever fleet they had that they just kind of held on and waited to turn back on to Bitcoin broke, for example, $75,000. They're going to have a real decision to make whether they upgrade their fleets or whether they put the facility up for sale. I don't think we're going to see quite a few facilities come up for sale after one more bite of the apple from an ROI on machine. They may be bought four years ago. And so I think that there's a second wave of private acquisitions to go on. And I think on the public side, it's just -- it's complicated to do any sort of public deal, and it rarely makes sense to pay the premiums that public to public transaction would require. And so you really have to find the diamond in the rough that makes sense. And that's why I think it wasn't more public-to-public consolidation also.

I guess as you look at the public miners, I think the top 10 largest have kind of owned call it, 25% of network cash for the last like 18 months. Do you think that changes over the next four years? I guess, talking about yourself and just the industry as a whole? Or do you think other nation state backed entities are going to increase cash maybe faster than public entities are? Or how should we think about just kind of like your share of rewards going forward?

I think that we will see some nation state mining, of course, but I don't think it will overtake kind of a public market side of mining. And the reason is we just have different reasons to mine. Nation state is going to want to mine just as to kind of pad the balance sheet on one side or to just add to their own treasuries on another, whereas as a public company, we are incentivized to really maximize and build on our percentage of market share, global hash rate. And so I think that's going to continue to drive miners to either increase or at least stay where we're at as a percentage of global hash. So I think that if you think about it in a different way is we may be competing a little bit, but we're incentivized to keep up.

Thank you, guys. I really appreciate it.

Our next question comes from the line of Reggie Smith with JPMorgan. Please go ahead.

Hey guys, thanks for taking the question. I wanted to follow-up. I know you talked about locking down or guaranteeing your price on devices. I was curious what, if any, impact tariffs could have on that? I'm not sure the relevancy to the space? And then I have a follow-up.

Yes, it definitely could. Now the units we're buying are coming -- not coming directly out of China. They're coming out of other Asian markets. But what we've also seen, and I think it's been in anticipation of this happening is we've seen most of the major manufacturers build out their production capabilities to include Mexico which, again, is still another place that may or may not have tariffs on the next upcoming future, but also domestic. I think that as we see some of the foundries that are starting to get built under the CHIPS Act actually come into reality over the next couple of years. we're going to see a lot of them having domestic capabilities. So I think that there's at least some tariff risk on that, that no one can protect against because it just depends on when you bring it in and where you bring it in from. But that's also the benefit of having a very large fleet state side. One way to look at it is if we're at 50 and somebody else is at 20 and they want to catch up they now have to pay the tariffs on everything in the gap to catch up. So I think there's going to be a potential barrier to growth for some of the smaller scale miners. And of course, smaller you are, the more expensive your capital is. So again, I think scale matters -- in a lot of different ways when you look at that. But we'll see what happens with the tariffs, and we'll react accordingly.

Got it. Now that makes a lot of sense and thought about it as a barrier to entry for smaller guys -- to renew or refresh the fleet. So that's a good point. So another question, we've talked about this kind of build versus buy. And obviously, the discussion thus far has been mostly around like building your own sites versus acquiring a site. Curious your thinking on just buying Bitcoin outright, and what may -- what could happen that may change your view on that? I'll bring that up because obviously, there are two big players in the space that have been pretty aggressively buying Bitcoin. I was curious where you shook out on that.

So how we look at this issue is it's the right time, right place, is to never say never as part of our strategy to continue to manage our HODL balance. There's going to be times we're going to buy and sell Bitcoin in certain transactions. In addition to the kind of buying to add to the HODL, one of the things we pay close attention to is basically the average value of what makes up our cost basis for our HODL, which we believe to be amongst the lowest because, of course, we're producing it at very healthy margins. So really, the way we look at it is you're faced with the decision, do you buy assets to produce Bitcoin on a reoccurring basis, at what right now is better than 50% margins to spot price? Or do you go buy Bitcoin. And again, it takes a more long-term view on that when you're buying assets that produce Bitcoin -- the design Bitcoin tomorrow. But again, I think that for the right strategic reasons, we're absolutely not opposed to it. We just feel that the best use and the highest return of capital to our shareholders has really been either buying or building facilities that produce Bitcoin. Now we are amongst one of the top 10 corporate holders of Bitcoin, and we do monitor that and plan to, of course, increase our spending on that list. And some of the miners that are buying are also the same ones that are mining at a loss or a very small margins. So they have less advantages than we have.

Not certain. I appreciate that. Thanks for the insight and the color, as always, guys. Great quarter. Congrats.

Thank you. Appreciate it.

And that concludes our question-and-answer session. And I will now turn the conference over to Brittany Moore.

Thank you for joining us today. We appreciate your interest in CleanSpark, and we look forward to speaking with you again next quarter.

Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation, and you may now disconnect.